China, South Africa new trade stats: it`s a whopper

China, South Africa new trade stats: it`s a whopper

Ties with China strengthen; time for Zuma to take next step?

China's total foreign trade with South Africa was up a whopping 77% in 2011 compared to the previous year, according Chinese statistics released this week.

China is South Africa's biggest trading partner. China's total foreign trade value with South Africa hit about US$45bn (about R363bn) in 2011, according to December's figures from China's customs authorities.

The figure confirms it was a well-timed move for China to include South Africa in its Brics (Brazil, Russia, India, China, South Africa) club last year as developed markets headed into a series of economic crises.

South Africans and others on the African continent can expect to enjoy cheap Chinese goods for some time yet, as China and South Africa continue to bed down their blossoming political relationship - and China actively encourages trade with emerging markets.

The bad news is that it is likely to remain difficult for South African manufacturers to compete with Chinese imports.

China is the world's largest exporter and, after the US, its largest importer.

China's General Administration of Customs (GAC) said on Tuesday that the country's total value of trade was up about 23% in December year-on-year, to a record US$3.6trn - an incredible achievement when you consider we are in the midst of the worst global economic recession in not far off a century.

The EU remains China's top trading partner ($567.21bn; up 18% year-on-year), while the US is its second biggest ($446.65bn; up 16% year-on-year). But, this picture could easily change in the long run.

Trade with fellow Bric nations grew at a much faster pace than China's trade with other partners. GAC data has trade with Brazil rising by about 35%, with Russia at around 43% and with South Africa at a staggering 77% last year.

China's exports still growing

China imports less than it exports, though its imports increased by about 25% in 2011 to US$1.74trn (2011 exports: US$1.9trn), reveal the latest statistics.

The Chinese government is under pressure to rebalance the figures and has spoken about doing more to encourage domestic consumption and imports.

China's exports increased by about 20% last year. Exports increased by about 30% in 2010 compared to the previous year, so appetite for Chinese goods has tapered off.

This slight slowdown in China's export growth rate has been taken by some market watchers as a good sign. They reckon the figures will encourage the Chinese authorities to take action to boost the economy, which in turn will drive imports of resources - which is good for the values of resource company shares in Africa and elsewhere.

Chinese manufacturers have been struggling in recent months for several reasons. These include the economic crises in their core customer markets in Europe and the US, a stronger Renminbi making their goods look more expensive and rising labour costs.

African countries that aren't too fussy about quality are welcome trade diversifiers for China in times like these.

But, even after the financial storms have passed in the US and Europe, as they eventually will, we can expect cheaply manufactured Chinese produce to continue washing up on our shores.

New manufacturing competitors for China

European leaders like France's Nicolas Sarkozy are emphasising the need to re-establish industrial production. This would be part of the effort to charge up the French economy, which in turn suggests competition for Chinese exports.

US presidential hopefuls are also talking up the importance of home-grown manufacturing efforts.

Negative sentiment towards China is up, thanks to beleaguered citizens being reminded that China's biggest export to the US in recent years has been unemployment.

Fresh competition from Europe and elsewhere is unlikely to derail China's manufacturing sector.

Although China is seeking to move up the value chain with its products, there is still a vast, unskilled population needing jobs.

As China moves its economic initiatives west to less developed areas, it seems inevitable that lower end manufacturing will pick up in those areas where Chinese labour is cheapest.

Environmental pollution is becoming an issue for China's authorities.

But, with millions of hungry mouths to feed and the political situation looking increasingly precarious for totalitarian rulers the world over, China's rulers will most probably turn a blind eye to culprits where there is job creation in high unemployment areas.

It is a pity Africa's leaders aren't doing more to ignite our own China-style industrial revolution with a view to boosting employment among un-skilled and semi-skilled labourers.

Credit for the deepening ties between South Africa and China must presumably go to President Jacob Zuma. It is surely no coincidence that the burgeoning relationship took off from the late 2000s, around the time Zuma rose up the political ranks to the highest office.

Perhaps it is time for South Africa's leader to seriously consider our own special economic trading zones, with cushy perks and financial deals for African operators who create jobs - just as China has done for its own?

We're way behind in the dust in Gross Domestic Product terms compared to China and the other major emerging markets, but it isn't too late to play catch-up.



  1. I believe China's electronics exports will be rising. I found an article here which suggests so: Electronics to drive China's 2012 exports


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Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!